Which of the following are required on the confirmation of a trade sent to the customer?
I. The capacity of the firm, either as agent or principal
II. The amount of commission in an agency trade
III. The amount of markup in a principal trade
IV. The amount of markup in a riskless principal trade
V. The total amount the customer owes the firm or the total amount the firm owes the customer for the trade
I, II, IV, and V. All of these items must be shown on the confirmation of a trade, except choice (III); for principal trades (buying for or selling from inventory), the B/D does not have to disclose the amount of markup. The B/D must disclose the markup on riskless principal trades. In a riskless principal trade, the B/D buys from another dealer, places the security in its inventory, and simultaneously sells to the customer. Unlike in regular principal trades, the B/D assumes no risk. Consequently, the markup or markdown must be disclosed. [Module 11, Monitoring Customer Complaints & Trade Errors, Section 6.2]
Q58180
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Exam Prep: Series 10
The concepts behind this question are explained in-depth in Module 11, Monitoring Customer Complaints & Trade Errors, Section 6.2.
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